Corporate lawyers call them "judicial hellholes." The term refers to state courts, usually in rural areas, that have strong consumer-protection laws, antibusiness jurors, and judges who often have been elected with the help of the local plaintiffs' bar. Sweeping class actions filed in these hostile jurisdictions have stung American Standard (ASD), Ford (F), Honeywell (HON), MetLife, and many others.
But now, after years of lobbying, Corporate America is about to get some relief. Congress appears to be on the verge of passing legislation that would shift most big class actions out of state court. Supporters of the Class Action Fairness Act (CAFA) argue that federal judges are better equipped to handle such complex matters. The legislation will be, in the words of Senate Majority Leader Bill Frist (R-Tenn.), "a big first step to restoring sanity and fairness to our legal system."
Don't believe it. While business is fully entitled to relief from judicial hellhole shakedowns, CAFA is more likely to be a step toward chaos rather than calm. At a time when federal courts are already overburdened, it will make case backlogs even longer. Indeed, some of the most vehement opponents of the proposal are the very same federal judges whom Frist and other tort reformers praise. In 2003 the U.S. Judicial Conference, a committee comprising federal judges across the political spectrum, asked Congress to ensure "that federal courts are not unduly burdened and states' jurisdiction over in-state class actions is left undisturbed."
The new legislation flies in the face of that advice. It is, in essence, proof that tort reform does not necessarily equal legal reform. Engaging in half-baked policymaking, lawmakers are tinkering with the rules just enough to claim credit with business lobbyists. But they're falling far short of the coherent reforms necessary to fix the legal system's real problems.
Even U.S. Supreme Court Chief Justice William H. Rehnquist has criticized CAFA's approach. In a Jan. 1 annual report, he described the federal judiciary's budgetary and staffing problems in sometimes alarming detail. Federal civil filings in 2004 rose 11% even as budget woes forced a 6% reduction in federal court staffing. "As the Judiciary's workload continues to grow," Rehnquist warned, "the current budget constraints are bound to affect the ability of the federal courts efficiently and effectively to dispense justice."
And who has played the biggest role in creating the federal judiciary's workload crisis? Many of the same folks who support CAFA. Despite the pleas of Rehnquist and others, House and Senate Republicans have consistently refused to increase judicial budgets while denying requests for new judgeships to handle growing caseloads. And, ironically, some of the people who are voting to federalize big class actions are also the very ones who preach the loudest about the primacy of states' rights.
This is not to deny that judicial hellholes are a problem. They are, and CAFA has a lot to like. But any tort "reform" that calls for piling more work on the federal judges without giving them the ability to handle it barely deserves to be called a reform at all.
By Lorraine Woellert